Police crack down on designer deceit in O.C.

A woman who covets these and other posh brands sits on a couch in a dark Westminster living room, staring at a carpet practically covered by not-so-posh knockoffs of handbags, purses and wallets – all emblazoned with the desired names.

Word of mouth brought the woman to this home, occupied by a suspected seller of counterfeit merchandise. Today – Thursday – she's in the market for a Louis Vuitton purse, but her husband won't let her buy the real thing because it's too expensive.

In all, federal agents seized more than $200,000 worth of product this week in Orange County during a series of raids that capped a six-month crackdown on local makers of faux brand-name items.

Though none of the vendors raided Thursday was arrested for hawking counterfeit merchandise, evidence was turned over to the Orange County District Attorney's Office for possible criminal charges.

The six-month effort in Orange County was one of the largest of its kind, and a Homeland Security Investigations official says it marks the start of a series of similar planned crackdowns on the growing crime of intellectual property theft.

In fiscal 2011, federal authorities snagged $1.1 billion worth of fake goods, a 24 percent increase from the year before. The dollar figure refers to what the genuine products would have sold at retail. Overall, counterfeiting cost U.S. businesses up to $250 billion last year in lost revenue, according to the International Anti-Counterfeiting Coalition.

"It is everywhere," says Dan Showalter, supervisory special agent and group supervisor of Homeland Security Investigation's fraud unit in Irvine. "Anyone can start their own counterfeit business with no overhead ... The advent of technology and the Internet is driving this industry."

Counterfeiting isn't just about money. Although handbags may not apply, many sham items pose safety and health hazards.

Counterfeit batteries can blow up a child's toy. Bogus pharmaceuticals can lead to sickness or worse. And urine is a popular product used for coloring in knockoff perfumes.

Up to 80 percent of the counterfeit merchandise is manufactured in China and Hong Kong, federal authorities say. India and Pakistan are other hot spots for manufacturers and suppliers.

Such items often wind up in a hot spot for fake product consumption – Orange County.

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Showalter adjusts his black gloves as he steers his unmarked, government-issued Ford Bronco.

He and other agents are driving to Shoe World in Garden Grove, the first of three locations they'll hit on Thursday. Later, they'll hit the house in Westminster and, after that, a kiosk in Huntington Beach.

The agents wear khaki pants and black T-shirts that identify them as Homeland Security Investigations police, and each has about 40 pounds of gear, including bullet-proof vests.

The lead agent, a ponytailed woman in her late 20s who declined to be named or have her face photographed because she does undercover work, clutches a dark-salmon folder packed with search warrants and other details of the operation.

The warrants started as tips that came to Homeland Security and from undercover purchases of allegedly faux stuff. A judge had to find there was probable cause before issuing the warrants, and local police, who have to be on hand when warrants are served, are part of law enforcement group at the strip mall.

As they step out of their cars and into a crowded strip mall filled with Korean-owned businesses, the agents and others cause quite a stir. And though Shoe World is holding a half-off sale on certain items, all business comes to a halt when agents pour into the place, around 10:30 a.m.

Several shoppers capture the activity inside Shoe World on their cellphones. The owner is not present.

A female agent, whose gear includes pink handcuffs, takes photos of the entire store before the agents and other investigators start plucking shoes and other items off the shelves.

She repeats the process about an hour later when the agents leave with six boxes stuffed with merchandise that they place into an unmarked silver van.

"She kept changing her story," the lead case agent says of the store manager, who ends up being arrested on suspicion of immigration-related violations.

•••

The day unfolds in a familiar pattern: brief bursts of activity followed by the meticulous cataloging of merchandise that might be fake and interrogations of vendors.

Chanel, Juicy Couture, Gucci, Tory Burch. The haul at Shoe World — between 10 and 20 percent of the store's total inventory – was larger than expected.

The vendor questioned at his home in Westminster around 1 p.m. specializes in high-quality counterfeit purses that, if genuine, would sell for about $500 retail, agents say. Instead, he hawks them for between $200 and $400.

The stitching on the purses is consistent. The materials are sturdy. Still, Homeland Security Investigations agents say, the items are knockoffs.

"He was comparing some genuine items with the counterfeit ones to show the potential customers how good they looked," Showalter says of the vendor, a twentysomething male who, ironically, is studying fashion design.

The vendor already is on probation for selling counterfeit merchandise, Showalter says. It will be up to the district attorney to determine if he'll soon be in hotter water.

•••

As sunset approaches, Gokhan Ali Kucuk, 32, describes himself as "in shock" as Homeland Security Investigations agents scour through the sunglasses, cellphone cases, watches, jewelry and wallets he sells from three sidewalk kiosks on Main Street in Huntington Beach.

"I'm just a small guy," Kucuk protests. "You guys should be going after the big guys."

He tells the agents that he bought his goods from a supplier in Los Angeles who showed him papers indicating the goods were manufactured legitimately.

Asked if he knowingly sells counterfeit goods, Kucuk says: "Not really," before adding: "There's nothing we're hiding. For God's sake, we're (located) in the middle of the street here ... If it's counterfeit, U.S. Customs should be checking it out before it gets to people like us."

Kucuk says he's been selling the merchandise under the name "Hot Trends" since 2008, and that he has a good reputation in Huntington Beach.

But Homeland Security Investigations agents point out there's an open case in Los Angeles County against Kucuk related to selling counterfeit goods.

•••

On Friday, Homeland Security Investigations announced the results of "Operation Faux Pas."

Through a total of 18 searches in Orange County, agents seized counterfeit goods that would have fetched more than $820,000 retail if they'd been genuine.

The seized merchandise includes purses, jewelry, sunglasses, cosmetics and perfume that bear counterfeit trademarks of more than two dozen well-known brands, including Louis Vuitton, Gucci, Rolex, Hermes and Chanel.

The six-month operation generated five arrests, four criminal indictments and two criminal convictions. Those charged include the suppliers and proprietors of a Laguna Beach shop, Cobbler's Corner, and a Westminster beauty salon and retail outlet, Spa by Mode.

Searches of both businesses turned up significant quantities of designer accessories that could be counterfeit, including leather goods, hats and sunglasses, officials say.

Claude Arnold, special agent in charge of Homeland Security Investigations in Los Angeles, said shoppers who buy from dealers of fake merchandise are wrong if they believe it's a victimless crime.

"The vendors who sell counterfeit merchandise are robbing from legitimate companies ... and, perhaps most important, they're hurting men and women who depend on those companies for their livelihood."